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Government sends delegation to EU over preferential trade scheme

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Workers stitch clothes at a garment factory in Sihanoukville’s Special Economic Zone. Sahiba Chawdhary

Government sends delegation to EU over preferential trade scheme

Officials from the Cambodian Ministry of Foreign Affairs (MFA) have embarked on a two-week mission to the European Union (EU) seeking to have the Kingdom’s tax-free trading preferences with the economic bloc extended, according to a press release on Thursday.

Led by lawyer and government adviser Sok Siphana, the delegation will be in Europe until July 1 trying to secure the future of Cambodia’s inclusion in the Everything But Arms (EBA) scheme.

This comes after the European Commission (EC) on April 30 submitted a report with a “list of issues” to the Cambodian government that was based mainly on data from UN Special Rapporteur Rhona Smith’s visit to the Kingdom.

The MFA’s release stated: “Driven by the spirit of transparency and accountability, this government mission aims to bring the necessary updates on the latest development in the situation of Cambodia in areas pertinent to the scope of this enhanced engagement exercise.”

Noting that the EC’s reported concerns were based solely on Smith’s visit, MFA’s release said it ignored a report from the International Labour Organization (ILO) that mentioned positive improvements to working conditions in the country.

The “list of issues” cites a backslide in Cambodian civil society that includes the law on NGOs, the law on political parties and the alleged repression of media outlets.

“Sadly and quite unfairly, in a very large number of cases, the government felt like a victim of unfounded accusations and excessive generalisations,” the press release said.

In a leaked letter to Prime Minister Hun Sen late last year, Cambodian Commerce Minister Pan Sorasak expressed concern about the cost of customs bills should the country lose its preferential treatment in the EU.

Sorasak then suggested that the premier send delegates to lobby the EU to avoid removing the tax-free measures, saying Cambodia could have to pay $676 million in tariffs.

The sum was estimated based on the $6.2 billion in revenue from exports to the EU in 2016.

Neither Sok Siphana, who is leading the delegation, nor the spokesperson for the MFA could be reached for comment on Thursday.

Mey Kalyan, a senior advisor to the Supreme National Economic Council (SNEC), said on Thursday that the EBA scheme is responsible for much of the foreign direct investment (FDI) in the Kingdom.

He said the decision from the government to send a team to negotiate is the right decision.

“The EU is always more reasonable and more understanding about the real situation in Cambodia, so I hope it will make a decision that benefits the Cambodian people,” Kalyan said.

Kaing Monika, deputy secretary-general of the Garment Manufacturers Association of Cambodia (GMAC), said Cambodia’s social security policy proved there were steps being taken to improve the conditions of the labour sector, adding that the minimum wage and average take-home pay were also steadily rising.

The European Commission’s 2016-2017 report, published in January, said Cambodia is the second-biggest beneficiary of the EBA scheme after Bangladesh – accounting for 18 percent of all EBA imports to the EU.

Also in January, an EU press release indicated that the bloc had started an “enhanced EBA monitoring process” for Bangladesh and Cambodia.

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